Market Review July 2025

World Happenings:
July 2025 unfolded against a backdrop of steady central bank policies and cautious optimism in global markets. In the United States, the Federal Reserve kept interest rates unchanged at 4.25 - 4.5% during its late-July meeting, with Chair Jerome Powell signalling a growing openness to rate cuts later in the year as inflation cooled to 2.7% year-over-year.

Across the Atlantic, the European Central Bank also maintained its policy rates, with President Christine Lagarde highlighting the importance of vigilance amid lingering trade tensions and geopolitical risks. Japan’s central bank adopted a similar wait-and-watch approach, holding rates steady at 0.5% amid subdued wage growth. On the geopolitical front, trade frictions between the U.S. and China remained in check, while global equity markets rallied on expectations of imminent monetary easing.

Market Roundup:
Indian equity markets navigated July with resilience, supported by record domestic inflows even as foreign investor participation remained mixed. The Sensex moved within a narrow range for much of the month before closing at 83,942.18, up 0.4% from June, while the Nifty 50 settled at 25,628.47. The standout story, however, came from the mutual fund industry, which delivered a historic performance. Total assets under management (AUM) surged to an all-time high of ₹75.36 lakh crore, driven by unprecedented equity inflows and a rebound in debt categories.

Equity mutual funds registered net inflows of ₹42,702 crore in July, an 81% jump from June’s ₹23,587 crore marking the highest monthly inflow on record. Systematic Investment Plans (SIPs) continued their upward trajectory, attracting ₹28,464 crore, with active SIP accounts climbing to a record 9.11 crore and total SIP AUM touching ₹15.19 lakh crore.

Debt mutual funds also staged a strong recovery, with inflows of ₹1.07 lakh crore led by liquid, money market, and short-duration categories. Hybrid funds maintained healthy traction, pulling in ₹21,162 crore, supported by robust activity in arbitrage and multi-asset allocation schemes. Passive strategies gained ground as well, with inflows more than doubling to ₹8,259 crore, though Gold ETFs saw a slowdown with ₹1,256 crore compared to June’s ₹2,080 crore. New Fund Offers (NFOs) were particularly active in July, with around 30 new launches mobilising ₹30,416 crore across equity, debt, and hybrid segments.

Conclusion:
July 2025 reinforced the strength of India’s domestic investor base and the depth of its capital markets. While global conditions remained cautious, the record-breaking inflows into equities, robust SIP participation, and renewed interest in debt and hybrid categories underscored the long-term confidence of investors. The Sensex and Nifty held firm near their peaks, supported by steady economic indicators and resilient corporate earnings. For investors, the message was clear: disciplined, diversified, and goal-oriented investing continues to deliver results, regardless of short-term global uncertainties.

Sources:
The Wall Street Journal, Financial Times, Times of India, AMFI, The Economic Times, Mint, Reuters

Seral Mehta

Collaborations & Partnerships team | FIKAA